Minneapolis responds to Governor Pawlenty’s budget proposal

Minneapolis officials learned Tuesday, Jan. 27 that Governor Tim Pawlenty is proposing to cut local governments by more than $99.6 million in 2009 and $193.4 million in 2010. Under Pawlenty’s biennial budget proposal, Minneapolis alone would be cut by $17 million in 2009 and $35 million in 2010. This represents a nearly 40% permanent cut to Minneapolis. To put that cut in context, $35 million is equal to Minneapolis’ entire budget for all street and bridge maintenance and repairs, traffic operations, street lighting and maintenance of our malls and plazas.

"It’s unfortunate that the State did not take a long-term approach to dealing with its major budget challenges back in 2003. This lack of serious financial planning means that main streets throughout Minnesota are again facing significant cuts from the State," said Mayor R.T. Rybak.

"Unlike the State, Minneapolis City leaders have used disciplined financial management over the course of the last seven years. That puts Minneapolis in the best possible position to deal with economic uncertainty," said Mayor Rybak. "We recognize that the current financial situation needs a shared sense of sacrifice, however it’s unfortunate for the taxpayers of Minneapolis that the Governor is looking to make the State’s lack of financial management another burden for our residents."

Minneapolis City leaders have taken a strategic, long-range approach to addressing City finances. Since the last time the State cut Minneapolis’ local aid in 2003, the City went through major long-term financial planning and made tough budget decisions. The City has also taken significant steps to streamline our operation and find new, innovative ways to deliver services and make the most of our resources. One result is that since 2002, Minneapolis leaders have been able to pay down $86.5 million in City debt, including paying off an internal services fund deficit that was nearly $40 million in 2000.

Minneapolis City leaders are already in the process of making major cuts to its current year’s budget after the Governor cut $13.1 million in funding to Minneapolis in December. This cut alone represents the equivalent of paying for 120 police officers, or 150 firefighters. Looked at another way, $13 million is about twice as much as it cost the City to respond to the I-35W bridge collapse.

Cities rely on local government aid to help pay for basic city services, such as police, fire, streets and parks. The total amount Minneapolis collects in property taxes isn’t enough to pay for the police and fire departments. In 2009, the City's property tax revenue to the general fund is estimated at $153 million. General fund support to the police and fire departments will total over $180 million.

Cities also contribute to the State financial situation, which is critically important when looking at ensuring that Minnesota communities are healthy and strong. For example, the State of Minnesota collects about $74 million from Minneapolis property taxes, and $390 million in sales taxes.

"Make no mistake, as Minnesotans we all want to be part of the solution. We recognize that these are tough economic times. However, the State’s budget crisis is a result of using short-term fixes instead of real solutions to long-term financial problems," said Council Member Betsy Hodges, who chairs the City's Intergovernmental Relations Committee. "Now is the time for all of us to think creatively and find innovative ways to deliver services. We are looking forward to working with legislative leaders to find lasting solutions to these financial difficulties. That is something that we in Minneapolis have been doing for years, and we are eager to take a shared, regional approach to finding solutions."

One area where the City of Minneapolis has been seeking reform is in its closed pensions. For years, the City has been aggressively seeking State approval to make major reforms to its pensions without impacting pension benefits. City leaders today urged the State Legislature to give Minneapolis the ability to make these reforms. City officials estimate that the additional costs related to public safety employee closed pension funds alone are projected to increase in excess of $38 million over the next five years due to stock market losses. This number continues to grow as we wait for the markets to recover.